5 Key Things to Consider When Operating A Business Payroll

Managing a business payroll is a task that demands precision, compliance, and a deep understanding of both legal obligations and employee rights.

It's a balancing act that requires attention to detail to ensure that employees are paid correctly and on time, statutory requirements are met, and the business remains compliant with evolving HMRC regulations.

Here at Blue Rocket Accounting, we work with many businesses offering a bespoke payroll management package which takes the complexities of payroll management and ensures a smooth process.

This can be hard to do alone, especially because there is much more than just paying your employees to consider.

In this blog, we delve into five critical aspects of payroll management that you might not have thought of straight away.

Let’s take a look.

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Statutory Sick Pay (SSP)

Statutory Sick Pay (SSP) is a fundamental component of employee welfare that businesses must navigate with care.

Eligible employees must have been ill for at least four days in a row (including non-working days) and earn an average of at least £123 per week before tax.

Employers are required to pay SSP at a rate of £109.40 per week for up to 28 weeks, necessitating accurate record-keeping and clear communication with employees regarding their rights and the necessary documentation.

Calculating SSP involves adhering to the current rate set by the government, which is updated periodically.

Communicating clearly with employees about their SSP rights and the documentation required is crucial for maintaining transparency and trust, as well as keeping an eye on new regulations to ensure you are always providing your employees with the right amount of payment.

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Maternity and Paternity Leave

Maternity and paternity leave rights are vital considerations for both employees expecting a child and employers planning to support them through this life-changing event.

Employees are entitled to maternity leave with pay for up to 39 weeks, with paternity leave entitlements also available for partners.

Employers must be familiar with the rules regarding the minimum statutory pay for maternity and paternity leave and the conditions under which employees qualify.

Handling maternity and paternity leave requires sensitivity and a structured approach, including managing notifications, maintaining open lines of communication with employees on leave, and ensuring that their return to work is seamlessly facilitated.

Employers must be proactive in managing these processes to support their employees effectively while minimising disruption to their operations.

While an accountant doesn’t necessarily help with how you handle employees on maternity or paternity leave, the finances are a big part of it, and ensuring a new parent doesn’t have to worry about getting paid the right amount can be a big weight off their minds at this time.

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Pensions

Pension contributions are a critical aspect of payroll management, with auto-enrolment representing a significant responsibility for employers.

The auto-enrolment scheme is a significant part of the UK's approach to workplace pensions, requiring employers to automatically enrol eligible employees into a pension scheme and make contributions on their behalf.

Employers must contribute at least 3% of an employee's qualifying earnings, while the total contribution (including the employee's contribution) must be at least 8%.

Understanding and managing auto-enrolment and pension contributions is essential for compliance and for supporting employees' long-term financial security.

While the current legislation specifies minimum contribution levels for both employers and employees, businesses may opt to contribute more.

Understanding the nuances of pension contributions, including eligibility criteria, opt-out procedures, and the management of pension schemes, is essential for employers. This not only ensures compliance with legal requirements but also supports employee financial well-being in the long term.

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Payslips

Payslips are the bridge between payroll processing and employee understanding of their pay and deductions.

Legally, employers are required to provide employees with a payslip for each pay period, detailing gross pay, net pay, and any deductions such as taxes, National Insurance, pension contributions, and SSP.

The transition to digital payslips has introduced efficiencies and environmental benefits, but employers must ensure that all employees have access to their payslips in this format.

Avoiding common errors, such as incorrect tax codes or failure to update employee details, is crucial to maintaining accuracy in payroll processing and employee trust.

While this may not be something that is looked upon as key, it is vital to maintain a strong payroll process to ensure trust is always there with your employees and that any queries can be handled quickly.

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Holidays

Holiday entitlement is a key employee right that requires careful management within the payroll process.

Calculating holiday entitlement for full-time employees is straight forward, but part-time and irregular-hours employees require a proportional calculation based on their working hours.

Employers must also navigate the rules around public holidays and the carry-over of holiday entitlements, ensuring that employees have the opportunity to use their entitled leave.

Managing holiday pay requires an understanding of the accrual system and the ability to calculate holiday pay accurately, including for employees with variable hours or pay.

Clear policies and communication regarding holiday entitlement and procedures for requesting leave are essential for smooth operation.

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Blue Rocket Accounting

Effective payroll management encompasses a broad spectrum of responsibilities.

By focusing on the five key processes mentioned above, among other essential payroll elements, employers can create a supportive workplace environment that values and respects employee rights and well-being.

The complexities of payroll management underscore the importance of staying informed about legal changes and best practices.

Employers who invest time and resources into understanding and efficiently managing their payroll processes will reap the benefits of a motivated, loyal workforce and a strong, compliant business.

If you’re an employer and you’re finding it hard to maintain a successful process with your payroll management, then maybe it is time to seek external help.

Our team have years of experience working with various businesses of different sizes and taking control of their payroll. We work with your business, building a bespoke package that works for you, delights your employees, and helps your business grow.

As you navigate the intricacies of payroll management, remember that the success of your business and the satisfaction of your employees often hinge on the accuracy and fairness of your payroll system, so if you want to know more about what we can do, get in touch today.

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*This article was correct at the time of publishing, and is not intended as a substitute for professional advice. If you would like to discuss payroll requirements in relation to your business, please call us on 01322 555442.

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Disclaimer: This article should not replace legal advice. Blue Rocket Accounting assumes no responsibility or liability for any errors or omissions in the content of this site. Although every effort is made to ensure information is accurate and up to date, Blue Rocket Accounting takes no responsibility for legal action the reader chooses to take as a result of reading said literature. Please seek direct advice based on your individual circumstance.

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